BUXA DOOARS TEA CO. (I) LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX
[Citation -2005-LL-1128-2]

Citation 2005-LL-1128-2
Appellant Name BUXA DOOARS TEA CO. (I) LTD.
Respondent Name ASSISTANT COMMISSIONER OF INCOME TAX
Court ITAT
Relevant Act Income-tax
Date of Order 28/11/2005
Assessment Year 2002-03
Judgment View Judgment
Keyword Tags issuance of intimation • period of limitation • additional ground • revisionary power • mistake apparent • original return • returned income • self-assessment • issue of notice • belated refund • advance tax • excess tax • time-limit
Bot Summary: Once the processing under s. 143(1) of the IT Act, 1961 is completed, the only method to disturb it is through issue of notice under s. 143(2) or 147 of the IT Act except in the case where there has been an apparent mistake of fact or law in the said order under s. 154 of the IT Act, 1961. In the facts and circumstances of the case, learned CIT erred in passing order under s. 263 of the IT Act, 1961, cancelling intimation under s. 143(1)(a) dt. In the facts and circumstances of the case, the order under s. 263 passed b y CIT is bad in law and without jurisdiction as view taken by learned AO in processing valid second revised return under s. 143(1) was one of the prescribed courses open to him, there being no statutory or other requirement to process same under s. 143(3) only, and so intimation revised by CIT could not be termed erroneous in view of ITO adopting one of the possible views. The order under s. 263 appealed against was passed by learned CIT without considering our written arguments supporting, inter alia, validity of second revised return filed, after issue of intimation under s. 143(1) and order of learned AO being not erroneous, and thus suffers from non-application of mind and arbitrariness on the part of learned CIT. In the facts and circumstances of the case, the learned CIT erred in placing reliance on CBDT Circular No. 670, dt. 31st March, 2003 as mentioned by the learned CIT in the notice under s. 263 and in the order passed under s. 263. Subsequently, the learned CIT took action under s. 263 to revise the order made under s. 154 of the Act. CIT/CIT, as the case may be, shall ensure that the conditions laid down under Board s order under s. 119(2)(b) referred to above are fulfilled.


This appeal preferred by assessee is directed against order passed by learned CIT under s. 263, dt. 17th March, 2005 for asst. yr. 2002-03. Briefly stated, facts of case are that assessee is company. original return was filed on 28th Oct., 2002, which was revised by assessee on 18th July, 2003 and again on 8th Aug., 2003. According to assessee, assessee had not received any intimation under s. 143(1) in respect of original return filed on 28th Oct., 2002. However, assessee did receive intimation under s. 143(1) of processing of second revised return dt. 30th June, 2004. On examination of assessment records, it was found by learned CIT that more than one processing order under s. 143(1) of IT Act have been passed by AO for impugned asst. yr. 2002-03. Therefore, notice under s. 263 dt. 18th Feb., 2005 was issued to assessee to show cause as to why second processing order under s. 143(1), dt. 30th June, 2004 be not treated as ab initio illegal and void. In reply, it was submitted by assessee that: Even after issuance of intimation under s. 143(1), revised return can be validly filed and intimation under s. 143(1) can again be issued of processing of revised return even after omission of sub-s. (1B) of s. 143 w.e.f. 1st June, 1999 as there is no change in s. 139(5) of IT Act which provides for filing of revised return before expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier. It was further submitted by assessee that processing of return under s. 143(1) cannot be equated to assessment and for this proposition, reliance was placed on following decisions: (i) Elegant Chemicals Enterprises (P) Ltd. vs. Asstt. CIT (2004) 85 TTJ (Hyd) 441: (2004) 271 ITR 56 (Hyd)(AT); (ii) Mahanagar Telephone Nigam Ltd. vs. Chairman, CBDT (2000) 162 CTR (Del) 554: (2000) 246 ITR 173 (Del); (iii) Asstt. CIT vs. Gujarat Bitumen Ltd. (2002) 76 TTJ (Ahd) 940: (2002) 82 ITD 614 (Ahd); (iv) Laxmi Enterprises vs. Dy. CIT (1998) 64 ITD 1 (Del); (v) Bharat V. Patel vs. Union of India (2004) 186 CTR (Guj) 639: (2004) 268 ITR 116 (Guj). It was further submitted that intimation issued under s. 143(1) dt. 30th June, 2004 is not erroneous as AO took one of possible views as intimation is not assessment, therefore, revised return filed by assessee after issuance of intimation can be subjected to processing again and for this proposition, reliance was placed on following decisions: (vi) Jamnadas T. Mehta vs. ITO (2002) 75 TTJ (Pune)(TM) 843: (2002) 257 ITR 90 (Pune)(TM)(AT), and (vii) Malabar Industrial Co. Ltd. vs. CIT (2000) 159 CTR (SC) 1: (2000) 109 TAXMAN 66 (SC): (2000) 243 ITR 83 (SC) It was, therefore, prayed that proceedings initiated under s. 263 be dropped. However, learned CIT did not accept assessee s submissions and arguments and observed/held at pp. 2 and 3 of order as under: "As per scheme of IT Act, CBDT in order to encourage voluntary compliance and to remove fears of visiting Income-tax Office of taxpayers, it was decided to accept almost 98 per cent of total returns filed as per computation given by assessee-company in his first return. In this process earlier records r e also not considered and AO is supposed to confine attention to papers and documents filed along with return. Government of India deliberately accepted and adopted this procedure to instill faith in taxpayers although it has resulted in some loss of revenue in case all returns were put in scrutiny. Once processing under s. 143(1) of IT Act, 1961 is completed, only method to disturb it is through issue of notice under s. 143(2) or 147 of IT Act except in case where there has been apparent mistake of fact or law in said order under s. 154 of IT Act, 1961. In all cases there is no question of acceptance of further revised returns which can only be done under scrutiny. This view finds support from Circular No. 670 of CBDT, dt. 26th Oct., 1993 [(1993) 115 CTR (St) 13] and revised letter where claim of refunds under s. 119(2)(b) of IT Act, 1961 even after approval by Chief CIT/CIT have to be issued after scrutiny and not under s. 143(1) of IT Act. Therefore, as mentioned in note under s. 263 only first processing dt. 31st March, 2003 shall be treated as legal and valid in eye of law. Other processing orders under s. 143(1) passed by AO shall stand cancelled." Being aggrieved by order of learned CIT, assessee is in appeal before us. grounds taken by assessee are as under: "1. In facts and circumstances of case, learned CIT erred in passing order under s. 263 of IT Act, 1961, cancelling intimation under s. 143(1)(a) dt. 30th June, 2004. In facts and circumstances of case, learned CIT failed to appreciate that second revised return was validly filed and so second intimation under s. 143(1) processing second revised return, being one of prescribed courses for dealing with IT returns, was validly issued which cannot be subjected to cancellation by CIT in absence of any erroneous elements therein. In facts and circumstances of case, order under s. 263 passed b y CIT is bad in law and without jurisdiction as view taken by learned AO in processing valid second revised return under s. 143(1) was one of prescribed courses open to him, there being no statutory or other requirement to process same under s. 143(3) only, and so intimation revised by CIT could not be termed erroneous in view of ITO adopting one of possible views. order under s. 263 appealed against was passed by learned CIT without considering our written arguments supporting, inter alia, validity of second revised return filed, after issue of intimation under s. 143(1) and order of learned AO being not erroneous, and thus suffers from non-application of mind and arbitrariness on part of learned CIT. In facts and circumstances of case, learned CIT erred in placing reliance on CBDT Circular No. 670, dt. 26th Oct., 1993 which was not relevant to issue involved, being related to belated claims for refunds in some cases." assessee vide letter dt. 19th Sept., 2005 has taken additional ground of appeal which reads as under: "Whereas first intimation under s. 143(1) dt. 31st March, 2003 was not effective intimation as it was never sent to appellant-company, learned CIT erred in restoring first intimation under s. 143(1) dt. 31st March, 2003 by cancelling second intimation under s. 143(1) dt. 30th June, 2004 by exercising his revisionary power under s. 263 of IT Act, 1961." Further assessee vide letter dt. 21st Sept., 2005 has taken one more additional ground of appeal. consolidated additional grounds of appeal are as below: "1. Whereas first intimation under s. 143(1), dt. 31st March, 2003 was not n effective intimation as it was never sent to appellant-company, learned CIT erred in restoring first intimation under s. 143(1) dt. 31st March, 2003 by cancelling second intimation under s. 143(1) dt. 30th June, 2004 by exercising his revisionary power under s. 263 of IT Act, 1961. Whereas intimation under s. 143(1) is not order. and Whereas intimation under s. 143(1) cannot be treated to have been passed in proceeding by AO. In circumstances, intimation under s. 143(1), dt. 30th June, 2004 was not amenable to revision under s. 263 by CIT, and learned CIT erred in cancelling it acting under s. 263." At time of hearing, learned counsel for assessee submits that in view of decision of Hon ble apex Court in National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249: (1998) 229 ITR 383 (SC) additional ground taken by assessee be admitted. On other hand, learned Departmental Representative kly opposed admission of additional grounds taken by assessee. We have carefully considered rival submissions of parties and perused material available on record. We find that additional grounds of appeal taken by assessee are legal grounds and relevant facts are already on record, therefore, following ratio of decision of Hon ble Supreme Court in case of National Thermal Power Co. Ltd. vs. CIT (supra), additional grounds taken by assessee are admitted. learned counsel for assessee while arguing all grounds of appeal as common ground kly relied on written submission filed before learned CIT. He further submits that after filing of original return on 28th Oct., 2002 assessee did not receive any intimation under s. 143(1) dt. 31st March, 2003 as mentioned by learned CIT in notice under s. 263 and in order passed under s. 263. He further submits that there is no error in action of AO in processing revised return filed by assessee under s. 139(5) of IT Act, therefore, order passed by learned CIT be cancelled. learned counsel for assessee apart from placing reliance on decisions cited before learned CIT further placed reliance on decision of Hon ble Gujarat High Court in S.R. Koshti vs. CIT (2005) 193 CTR (Guj) 518: (2005) 276 ITR 165 (Guj) and decision of Hon ble Calcutta High Court in Hilltop Holdings India Ltd. vs. CIT & Ors. (2005) 197 CTR (Cal) 619: (2005) 147 TAXMAN 404 (Cal): (2005) 278 ITR 501 (Cal). He, therefore, submits that order passed by learned CIT be vacated. On other hand, learned Departmental Representative kly supported order passed by learned CIT in cancelling second processing under s. 143(1) dt. 30th June, 2004. She, therefore, submits that order passed by learned CIT be upheld. We have carefully considered rival submissions of parties and perused material available on record. We find that it has been held by Hon ble Calcutta High Court in Hilltop Holdings India Ltd. vs. CIT (supra) that in order to attract s. 263, following four conditions need be satisfied viz., (1) there should be proceeding; (2) there should be order passed by AO in such proceeding; (3) such order should be erroneous; and (4) and such order should be prejudicial to Revenue. It has been further held that absence of one of conditions would be sufficient to detract s. 263. We further find that there is no dispute that original return filed by assessee on 28th Oct., 2002 was within due date as provided under s. 139(1) of IT Act. We further find that assessee has filed revised returns on 18th July, 2003 and again on 8th Aug., 2003 under s. 139(5) of IT Act. It is not case of Revenue that original return filed by assessee is not in accordance with provision of s. 139(1) of IT Act or revised returns filed by assessee are beyond period of limitation provided under s. 139(5) of IT Act or revised returns filed by assessee are no return in eye of law. In S.R. Koshti vs. CIT (supra), relied on by learned counsel for assessee, assessee furnished return of income on 31st July, 2001 for asst. yr. 2001-02. There appears to be some dispute between assessee and respondent, i.e., CIT as to whether aforesaid return of income was or was not processed under provisions of s. 143(1) of Act. It is stand of respondents, as averred in affidavit-in-reply, that return of income was processed on 28th March, 2002 and refund order had been issued which was encashed by petitioner/assessee through his bank account. revised return of income came to be filed on 24th Sept., 2002 claiming exemption of Rs. 5 lakhs from compensation under s. 10(10C). AO framed order under s. 154 of Act rectifying mistake apparent on record and granting credit for prepaid taxes to tune of Rs. 3,18,195. AO also directed grant of interest under s. 244A of Act. order was made on 27th March, 2003. Subsequently, learned CIT took action under s. 263 to revise order made under s. 154 of Act. It was held by learned CIT that order dt. 27th March, 2003 made under s. 154 of Act was erroneous and prejudicial to interest of Revenue and as such cancelled same. As result, order under s. 143(1) of Act accepting returned income at Rs. 9,98,182 was held to prevail on basis of original return of income dt. 31st July, 2001. In meantime, assessee preferred application under s. 264 of IT Act which was rejected by learned CIT vide order dt. 29th March, 2004 by holding that petition was beyond period of one year from date of processing of order under s. 143(1) of IT Act and hence, delay was not condoned. He also referred to order made by him under s. 263 of Act for purpose of denying relief by holding that revised return filed on 24th Sept., 2002 was invalid return, being return filed out of time and hence, non est at law. On writ petition against orders under ss. 263 and 264 it has been held at p. 167 (short notes) as under: "Held, that even if for sake of argument, it was accepted that intimation was also forwarded along with refund order, it was admittedly issued only on 13th May, 2002. In circumstances, there being no order of assessment as envisaged under provisions of Act, revised return under s. 139(5) could have been submitted by petitioner on or before 31st March, 2003, and, in fact, was so submitted on 24th Sept., 2002. revised return was filed within period of limitation and was hence valid. AO was not only right in law, but was fully justified in passing order under s. 154 of Act after entertaining revised return which was filed within time-limit statutorily prescribed. Therefore, also, respondent could not have assumed jurisdiction under s. 263. CIT had not stated that petitioner was not entitled to relief under s. 10(10C). In fact, said position was undisputed. AO himself had passed order under s. 154 of Act granting such relief. In such circumstances, order under s. 264 could not be sustained. orders under ss. 263 and 264 had to be quashed and order under s. 154 would prevail." In Hilltop Holdings India Ltd. (supra), relied on by learned counsel for assessee, it has been held vide para 28 appearing at pp. 512 and 513 as under: "Mr. Shome, however, contended that intimation is not order of assessment; still, however, it is order for purpose of s. 263. Inasmuch as, while issuing intimation, AO does not merely discharge ministerial act since it involves process to determine liability to pay tax or refund of excess tax paid or to accept self-assessment as submitted, which involves application of mind and taking decision. There cannot be any liability to pay or refund unless there is direction or order to that effect. Therefore, though not assessment order, intimation is nevertheless order. Since it was not order of assessment, therefore, assessee is entitled to file revised return under s. 139(5) even after issue of intimation as was held in Kalyanpur Cement Ltd. vs. Jt. CIT (2005) 195 CTR (Cal) 39: (2005) 276 ITR 49 (Cal). But this proposition cannot be reconciled with Explanation to s. 143, which allows assessee to prefer appeal under s. 246 and seek revision under s. 264 confining characteristics of intimation as deemed order only for limited purpose for which fiction was created through enactment of Explanation. Even if intimation could be treated to be order, even then question remains as to whether it would be order revisable under s. 263. In Kalyanpur Cement Ltd. vs. Jt. CIT (2005) 195 CTR (Cal) 39: (2005) 276 ITR 49 (Cal) it has been held at p. 54 as under: "Whether second revised return is valid: Sec. 139(5) permits furnishing of revised return within relevant assessment year or before completion of assessment whichever is earlier provided he has furnished return either under s. 139(1) or in pursuance of notice issued under s. 142(1). In present case, assessee had filed return under s. 139(1). Therefore, he is eligible to file revised return under sub-s. (5) within or before end of relevant assessment year or before completion of assessment, whichever is earlier." Respectfully following on above decisions, we are of view that revised returns filed by assessee under sub-s. (5) of s. 139 are valid returns in eye of law. In Hilltop Holdings India Ltd. (supra), their Lordships of Hon ble Calcutta High Court after holding that decision in CIT vs. Rajkumar Dipchand Phade (2001) 168 CTR (Bom) 335: (2001) 249 ITR 520 (Bom) and CIT vs. Anderson Marine & Sons (P) Ltd. (2004) 189 CTR (Bom) 118: (2004) 266 ITR 694 (Bom) in which it has been held that intimation is order of assessment, could not persuade us to agree with reasoning given therein for purpose of holding intimation to be order with meaning of s. 263, have further held vide para 33 appearing at p. 515 as under: "Conclusion: As discussed above, by no stretch of imagination intimation/acknowledgement under s. 143(1)(a) can be treated as order except as contemplated in Explanation to s. 143 thereof in view of fiction created thereunder. legislature had made distinction between order and intimation. intention of legislature was clear in creating fiction through Explanation to s. 143 treating intimation/acknowledgement to be order within confined meaning of ss. 246 and 264 alone. provisions of s. 154(1) empowering AO to rectify intimation would not lend support to hold intimation or acknowledgement as order. This is so particularly because of scope of s. 143(1)(a) having been confined only to extent enumerated in cls. (i), (ii) and (iii) of first proviso to s. 143(1)(a). fiction is self-explanatory to limit itself to construe intimation as deemed order by reason of fiction only to extent of ss. 246 and 264 and order amenable to s. 264 is outside purview of s. 263. Therefore, so long Explanation to s. 143 remains operative, intimation/acknowledgement cannot be treated to be order for purpose of exercising power under s. 263. Therefore, initiation of proceeding under s. 263 is wholly without jurisdiction and nullity and void and cannot be sustained." In case of S.R. Koshti (supra) it has also been held at p. 171 as under: "On plain reading of said Explanation, which was omitted by Finance Act, 1999, w.e.f. 1st June, 1999, it becomes clear that even for limited period when legislature wanted intimation to be deemed to be order, it was for limited purpose, namely, for purposes of appeal under s. 246 of Act and revision at instance of assessee under s. 264 of Act. Thus, even when said Explanation was on statute book, power to invoke provision of s. 263 of Act could not be exercised in circumstances. For year under consideration, admittedly, said Explanation is not on statute book. respondent, therefore, could not have, in circumstances, treated intimation as order for purposes of non-suiting petitioner by treating intimation dt. 28th March, 2002, as being order of assessment and thus, denying petitioner statutory right to file revised return within period of limitation. revised return is filed within period of limitation and is hence valid. In these circumstances, finding recorded by respondent in impugned order under s. 263 of Act that revised return was non est in law, cannot be sustained and is accordingly held to be bad in law." CBDT, Circular No. 670, dt. 26th Oct., 1993 [(1993) 115 CTR (St) 13], relied on by learned CIT reads as under: "1. I am directed to forward herewith order contained in F. No. 225/208/93/ITA-II, dt. 12th Oct., 1993, passed by CBDT in exercise of powers conferred on it under s. 119(2)(b) of IT Act. By virtue of this order, AO can admit belated refund claims under s. 237 of IT Act in cases where refunds may arise as result of tax deducted/collected at source and advance tax payments where amount of such refund does not exceed Rs. 1 lakh for any assessment year. Board have also decided that in such cases (i) where refund does not exceed Rs. 10,000 for any assessment year AO shall obtain prior approval of CIT before entertaining belated refund claim; and (ii) where refund exceeds Rs. 10,000 but does not exceed Rs. 1,00,000 for any assessment year AO shall obtain prior approval of Chief CIT or Dy. CIT before entertaining belated refund claim. Chief CIT/Dy. CIT/CIT, as case may be, shall ensure that conditions laid down under Board s order under s. 119(2)(b) referred to above are fulfilled. Where Chief CIT/Director General of IT/CIT/Director of IT finds that four conditions laid down in order under s. 119(2)(b) dt. 12th Oct., 1993 are satisfied but still it is not case of genuine hardship, he should refer belated refund application to Board for final decision. This order is effective from 1st Nov., 1993 and will apply to all claims of refund pending as on that date and also in respect of all refund claims filed on or after that date." From fair reading of above circular, we find that same is with regard to consideration of belated refunds which is not issue before us, therefore, circular relied upon by learned CIT does not support Revenue s case, hence not applicable. Having regard to facts of case and situation in law as discussed above, we are of view that initiation of proceeding under s. 263 is wholly without jurisdiction, nullity, void and cannot be sustained and accordingly order passed by learned CIT is directed to be cancelled. grounds taken by assessee are, therefore, allowed. In result, appeal stands allowed. *** BUXA DOOARS TEA CO. (I) LTD. v. ASSISTANT COMMISSIONER OF INCOME TAX
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